BP cut to 'sector perform' by RBC Capital Markets

RBC Capital Markets downgraded BP to’ sector perform’ from ‘outperform’ and kept the price target at 500p, following the stock’s significant outperformance versus its closest peer Royal Dutch Shell.

“We continue to see potential upside to BP's cost reduction potential, but feel the risk reward opportunity has become more balanced for now,” said RBC.

Although year to date BP is up by only 6%, over the last 12 months it has been the biggest outperformer, excluding BG Group, while also outperforming Shell by 22% year to date.

It said that BP’s recent outperformance has been driven by a greater willingness to adapt to the current environment through more moderate spending, coupled with seemingly deceasing risk around its Russian operations.

“We continue to believe BP has the highest opportunity for cost reduction in the sector; however from our conversations with investors, we feel the upside opportunity may be fairly well understood, with limited near-term catalysts,” RBC said.

At 10:28, BP shares were down 0.7% at 431.50p.